The star appeared alongside radio personality Jackie O Henderson, comedian Dave Hughes and singer Dannii Minogue on the TV talent show, but has apparently been let go from the line-up after angering her co-stars with her lack of respect while working on the Channel 10 series.
"(Lindsay) was tricky with demands and had a complete lack of respect for time schedules," a TV insider told Australian site New Idea.
The singer/actress, who made her return to pop music earlier this year with her new track "Xanax", will apparently be replaced on the panel by Australian singer Kate Ceberano - who is rumoured to be The Lion on this year's season.
A second season of the show, which sees masked celebrities perform as the judges attempt to guess their identity, is yet to be commissioned, with judging arrangements still under wraps.
Speaking on Australia's "Kyle and Jackie O Show" last week (end October 06), Lindsay denied reports she was a "diva" on set and said people were just digging for "negativity".
"People want to find the negative for no reason. There was nothing negative about (filming The Masked Singer)," she said.
Jackie added that working on the show was "the best experience" and "so much fun".
However, on his "Hughesy & Kate" radio show back in July, Dave confessed Lindsay could be difficult, explaining: "She complained about the fact she had to go downstairs to smoke cigarettes."
"She's not happy to follow the rules but she's not going to break the rules," he considered, adding the star would be gone for 15 minutes at a time.